Division of Finance & Administration

Endowment Accounting

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An endowment is a donation of money or property to a non-profit organization, which uses the resulting investment income for a specific purpose.

UVM's endowment accounting services are provided by the Financial Reporting & Accounting Services team within University Financial Services.

Types of Endowment Funds

Unrestricted Endowment Income – Fund 100 - Income from an endowment that is not restricted by the donor and can be spent on any institutional need.
Quasi Endowment – Fund 210 (unrestricted) & 350 (restricted) - Funds that are treated like an endowment, i.e., principal is invested and only return on the investments can be spent. The source of these funds can be general funds (unrestricted) or restricted gifts and bequests that were not designated for an endowment by the donor but the administration decided to treat them like an endowment.
Restricted Endowment Income – Funds 320 and 321 - Income from an endowment that can only be spent for purposes stipulated by the donor.
Term Endowment – Fund 352 (restricted) - Gifts that are treated like an endowment for a specified time. At the end of that time, if the fund reaches its goal, it becomes a true endowment. If it doesn’t, it reverts to spendable restricted gifts (fund 310).
True Endowment – Fund 400 - A gift that is invested in perpetuity. Only the return on the investment can be spent.

How a Gift Becomes an Endowment

Donor's Gift: Donor's gift buys units of UVM's long-term investment pool (also known as the "consolidated endowment") at current market value. The long-term investment pool grows with the addition of the Donor's gift (and with all gifts and reinvestments).
Investment: The donor's gift is invested along with the rest of the long-term investment pool, and generates a return (net of fund manager fees).
Income: The University's endowment policies determine the income distributed to the donor's endowment and the management fee.
Spending or Reinvestment:

If the fund is a True Endowment, income generated per UVM endowment policies is made available for spending by the department. At the end of the fiscal year, any unspent monies are carried forward as net assets and are added to the next fiscal year's available spending budget.
If the fund is a Term Endowment, income is reinvested, buying more units of the long-term investment pool. Terms are usually based on the book value and years invested (e.g., "must reach value of $100,000 in three years").

Spendable Endowment Income Calculation

Date of Gift	June 2019
Donor's Gift	$100,000	A
Consolidated Endowment as of	May 2019
Market Value	344,298,019	B
Number of Units	5,416.059900	C
Market Value/Unit	63,570	D = B/C
Donor's Units	1.595619	E = A/D
Average 13-Quarter Market Value	262,782,461	F
Number of Units	5,044.978764	G
Income/Unit	2,344	H = F/G*4.5%
Income to Distribute = Spending Budget	$3,740	*I = EH**